Steel Buyers Speculate on Storm’s Impact

· “The biggest impact will be on the transportation network. This will stretch an otherwise tight trucking situation.” Service Center/Wholesaler

· “The effect of the storm will be higher prices. There will be no year-end deals as many will need new cars. Over 1 million tons of replacement will need to be ordered with domestic mills.” Trading Company

· “Inventory of coated and CRC could be damaged, leading to some shortages, which is not easy to replenish in the short-term.” Service Center/Wholesaler

· “Water damaged coils are not as much of the issue as accounting for workforces and overall logistics, i.e. available trucks.” Steel Mill

· “It will take some time for the port to get steel flowing out of Houston for customers outside of the region.” Manufacturer

· “If steel in Texas gets hung up, the East could suffer. I expect excess in the spot market that often comes East going South temporarily.” Service Center/Wholesaler

· “Short term, there may be some availability problems due to material getting stuck at the docks. Long term, that same material may be sold off at discounted prices causing a whole new set of problems.” Service Center/Wholesaler

· “Estimates of 500,000 vehicles to be scrapped out due to the floods will have an impact over the second half, leading to increased vehicle sales. Approximately an additional 500,000 tons of shred will be available, assuming one ton per vehicle of recovery.” Service Center/Wholesaler

· “While it doesn’t seem to have affected steel-producing companies, it has affected the docks and Mississippi River travel. The expected impact of Hurricane Irma [in Florida] leaves everything in question.” Service Center/Wholesaler

· “Wet steel, disruption in the ports, the rebuilding of Houston and now the rebuilding of Florida after Irma passes through. Yes, this will have an impact on steel availability and consumption.” Service Center/Wholesaler

Some see the aftermath of the record rainfall in Houston as milder than the headlines would suggest:

· “Not as bad as originally thought, but still lots of infrastructure and consumer goods to be rebuilt or replaced.” Service Center/Wholesaler

· “The interruption to the supply chain will be short-lived.” Manufacturer

· “Our factory in the area was unaffected. We are having some issues getting material into the facility. All steel products are safe with no damage.” Manufacturer

· “Word is that most of the steel on the ground at service centers escaped damage.” Service Center/Wholesaler

· “Houston isn’t a location for steel mills. Unless millions of dollars of imported material got damaged, there’s no impact on supply. Demand for steel for FEMA projects is a long-term deal just like after Katrina. The only big impact is shipping costs with higher fuel surcharges coming.” Service Center/Wholesaler

· “It will limit some imports, but only for 4-6 weeks before the flow returns to normal.” Manufacturer

· “It will probably not have a big impact unless shipments are tied up by lack of railcars and trucks.” Manufacturer

· “I would expect rebuilding to take a while. The impact when spread over a couple of years should not affect the market as a whole.” Service Center/Wholesaler

· “I believe this will be driven more by perception than reality.” Manufacturer

Longer term, some observers see an upside for steel:

· “Natural disasters always help the steel industry, rebuilding and replacing.” Service Center/Wholesaler

· “After 3-6 months of negative effects, the rebuilding begins and will be positive for a couple of years.” Steel Mill

· “Initially, supply of imports already in Houston will be disrupted. I suspect building materials will be in high demand and boost steel consumption.” Service Center/Wholesaler

· “One of my customers calls these disasters ‘home improvement’ storms. His references have been on a smaller scale, but the reality still applies.” Service Center/Wholesaler

Further fallout from the storm could be higher steel prices, a move not necessarily popular among steel buyers:

· “Whether the impact is real or not, with Section 232 drifting away, the mills will need another talking point to justify increasing prices, so this will give them one.” Service Center/Wholesaler

· “Rebuilding and demand in the short term will give the mills another excuse to raise pricing on steel and gas.” Manufacturer

· “It’s a card the steel industry will play.” Manufacturer